Another Smart Move From Microsoft’s Patent Licensing Group

This past September, Canadian patent licensing company MOSAID acquired 400 patent families from Nokia through a purchase of Core Wireless S.a.r.l. The purchase netted MOSAID 2000 total patents, of which more than 1200 are reportedly “standards essential” for 2G, 3G and 4G wireless standards. MOSAID claims that “it made no upfront payments to acquire the Core Wireless portfolio” and will retain one third of licensing revenue generated. Meanwhile, Microsoft already “secured a license to the Nokia patents now acquired by MOSAID” and retains “a passive economic interest in the revenue generated from the licensing of those patents to third parties.” Horacio Gutierrez referred to the whole arrangement as “an effective way to make these Nokia innovations available to the industry and to unlock the considerable value of this IP portfolio.”

In other words, the September deal between Nokia and MOSAID means: (1) Microsoft secured freedom-to-operate under the Core Wireless portfolio; (2) that same portfolio is now in the hands of an experienced patent licensing entity; and (3) Microsoft has a chance to get back whatever it paid to license the portfolio–or potentially profit–if MOSAID is successful licensing the portfolio to the rest of the market.

Earlier this week, PatentlyO reported a lawsuit that the MOSAID-controlled Core Wireless filed against Apple, alleging infringement of eight of the former Nokia patents. While it’s obviously too early to say how successful MOSAID will be, their progress should capture the attention of Chief IP officers everywhere. The business model deployed by Microsoft here unlocks the potential for early adopters of a portfolio to not only benefit from quickly securing freedom to operate, but the added benefit of recognizing a return on the initial investment into the third-party IP in the first place.

Discussion

One may add that MSFT invested $1B in NOK when the partnership was announced and it is conceivable that MSFT received a license to the Core Wireless patents as well as an economic interest in the entity. MOSAID or it’s new owner Stirling Partners may prove to have gotten a real deal here once this patent portfolio achieves its potential. Whether MSFT chose the right partner in NOK or not won’t be known for some time. Personally I would not bet against this pair as MSFT has shown lots of patience in getting what it needs to succeed.